Correlation Between McEwen Mining and Southern Copper
Can any of the company-specific risk be diversified away by investing in both McEwen Mining and Southern Copper at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining McEwen Mining and Southern Copper into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between McEwen Mining and Southern Copper Corp, you can compare the effects of market volatilities on McEwen Mining and Southern Copper and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in McEwen Mining with a short position of Southern Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of McEwen Mining and Southern Copper.
Diversification Opportunities for McEwen Mining and Southern Copper
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between McEwen and Southern is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding McEwen Mining and Southern Copper Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Copper Corp and McEwen Mining is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on McEwen Mining are associated (or correlated) with Southern Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern Copper Corp has no effect on the direction of McEwen Mining i.e., McEwen Mining and Southern Copper go up and down completely randomly.
Pair Corralation between McEwen Mining and Southern Copper
Assuming the 90 days trading horizon McEwen Mining is expected to under-perform the Southern Copper. In addition to that, McEwen Mining is 1.29 times more volatile than Southern Copper Corp. It trades about -0.46 of its total potential returns per unit of risk. Southern Copper Corp is currently generating about -0.28 per unit of volatility. If you would invest 11,296 in Southern Copper Corp on August 30, 2024 and sell it today you would lose (1,278) from holding Southern Copper Corp or give up 11.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
McEwen Mining vs. Southern Copper Corp
Performance |
| Timeline |
| McEwen Mining |
| Southern Copper Corp |
McEwen Mining and Southern Copper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with McEwen Mining and Southern Copper
The main advantage of trading using opposite McEwen Mining and Southern Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if McEwen Mining position performs unexpectedly, Southern Copper can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Southern Copper will offset losses from the drop in Southern Copper's long position.| McEwen Mining vs. Tungsten West PLC | McEwen Mining vs. Argo Group Limited | McEwen Mining vs. Hardide PLC | McEwen Mining vs. Versarien PLC |
| Southern Copper vs. Tungsten West PLC | Southern Copper vs. Argo Group Limited | Southern Copper vs. Hardide PLC | Southern Copper vs. Versarien PLC |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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